WT Business Beat

By Nick Wakeman

Contractors sent to prison for fraud scheme

The second of at least two co-conspirators has been sentenced for participating in a alleged contracting scheme that created the illusion of competition.

Anthony R. Bilby, 40, of Leesburg, Va., was sentenced this week to 16 months in prison and two years of supervised probation. He pleaded guilty in December to conspiracy to commit wire fraud, and what the Justice Department described as “major government fraud.”

As part of his plea, Bilby agreed to forfeit nearly $1.1 million -- his alleged proceeds from the conspiracy.

A second man, Thomas S. Flynn, pleaded guilty in October, and has been sentenced to three months. According to court records, Flynn received at least $80,900 as part of the plot.

Neither the Justice Department nor court records are naming the companies Bilby and Flynn worked for, but it is obvious from reading the statement of facts that was released as part of their guilty pleas that others at the companies and from inside the government were involved.

A spokeswoman for the U.S. Attorney’s Office for the Eastern District of Virginia said no one else has been indicted and declined to comment on whether the investigation is continuing.

However, in a statement released when Bilby pleaded guilty, the Justice Department said he agreed to cooperate with investigators as part of his plea agreement.

The companies involved are described as IT resellers and also are certified as service-disabled, veteran-owned companies.

At least three companies had people involved in the scheme. Bilby is described as an outside sales rep working at least one of the companies.

People inside the government also were involved and provided Bilby with internal government documents, according to the statement of facts.

The way the scheme worked is that Bilby or Flynn or unnamed others would submit bids from multiple companies, but only one bid from one company was designed to be considered a winning bid. The other bids were purposely higher so they were guaranteed to lose.

The government was to get the impression that a competition was taking place.

The co-conspirators shared company logos and templates from their companies so that a single person would be preparing the bids from all the companies.

They also took turns on which companies would play the role of the winning bidder and which would be tapped as the losing bidders.

The co-conspirators would then share a 10 percent cut off of the profit gained under the winning contract.

The conspiracy took place over a five-year period.

Agencies with contracts targeted in the scheme include the Environmental Protection Agency, Homeland Security Department, the General Services Administration and the Agriculture Department.

According to the statement of facts, the largest contract was with DHS for a wide-area network optimization that was worth $24.1 million. The losing bids came in at $26.7 million and $29.1 million.

I can only say, Wow. I’ll be doing my best to follow this case because it is hard to imagine that others won’t be charged.

I’ve also put in a request for an interview with the U.S. attorney involved the case.

Let me know if you hear anything.

Posted by Nick Wakeman on Feb 21, 2014 at 1:44 PM

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Reader Comments

Fri, Mar 14, 2014
Steve
NoVa

Why haven't the three companies involved been dis-barred from Federal contracting. "Company T" = Thundercat which is a direct spin off from "Company K" = Knight Point. They then get a willing partner in "Company F" = Four Points Technology. No one can believe the executives at these three small SDVOSB resellers had no idea what was going on. Really? Just a few rouge and agressive Account Managers? These three conpanies and executives need to be banned for life from Gov contracting.

Mon, Feb 24, 2014
Stacey

"As part of his plea, Bilby agreed to forfeit nearly $1.1 million -- his alleged proceeds from the conspiracy." Really? Does Flynn agree to return his "earnings" as well? When did we decide that no matter how one crosses the finish line, the winnings are theirs to keep?
I must have my rose colored shades on today but yes, I am offended! They not only wrongfully earned the awards in the first place but they also slapped the very hand that provided their special designation as a veteran-owned business.
As someone who works long hours to conscientiously craft a winning strategy and price into a proposal to win federal contracts, I find their gaming of the system deplorable. This industry is tough enough with customer delays, tightening of the acquisition dollars, and fair competition.

Sun, Feb 23, 2014

Here is the case info of the former Knightpoint and Thundercat employee:
EASTERN DISTRICT OF VIRGINIA
Alexandria Division 1:13-cr-00466-AJT Document 8 Filed 12/02/13
The plea facts are absolutely fascinating. I wonder if DHS will take action against the companies since they were awarded Eagle II?

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